Golar LNG Q2 2025 Earnings Report

Golar LNG EPS Results

• Actual EPS: $0.26
• Consensus EPS: $0.29
• Beat/Miss: Missed by -$0.03
• One Year Ago EPS: N/A

Golar LNG Revenue Results

• Actual Revenue: $75.67 million
• Expected Revenue: $79.37 million
• Beat/Miss: Missed by -$3.70 million
• YoY Revenue Growth: N/A

Golar LNG Announcement Details

• Quarter: Q2 2025
• Date: 8/14/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 14, 2025
• Conference Call Time: 8:00AM ET

Golar LNG (NASDAQ:GLNG) designs, converts, owns, and operates marine infrastructure for the liquefaction of natural gas. The company operates through three segments: FLNG, Corporate and Other, and Shipping. It engages in the regasification, storage, and offloading of liquefied natural gas (LNG); operation of floating liquefaction natural gas (FLNG) vessels or projects; transportation of LNG carriers; and vessel management activities. Golar LNG Limited was founded in 1946 and is headquartered in Hamilton, Bermuda.

Golar LNG Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Secured 20-year charter for the Hilli FLNG and reached FID on the Mark II conversion, boosting the firm $17 billion EBITDA backlog and providing long-term cash flow visibility.
• Positive Sentiment: Completed a $575 million convertible bond issuance, increasing cash to nearly $900 million and repurchasing 2.5 million shares (~2.5% of equity) to strengthen liquidity.
• Neutral Sentiment: Gimi FLNG reached commercial operations in June and has exported eight cargoes while fine-tuning performance; delays in a $1.2 billion Chinese sale-leaseback are being addressed with alternative refinancing plans.
• Positive Sentiment: Maintained a fully delivered net debt/EBITDA ratio of 3.4× with contracted EBITDA set to grow fourfold by 2028, supporting an estimated $600 million+ free cash flow (~$6/share) before commodity upside.
• Positive Sentiment: Signed EPC price and delivery schedule agreements with target shipyards for a fourth FLNG unit, with funding expected via existing fleet financing and plans to follow with a fifth unit.

Presentation

[Operator]

Welcome to the Golar LNG Limited Second Quarter twenty twenty five Presentation Conference Call and Webcast. After the slide presentation, the CEO, Carl Friedrich Staubo and CFO, Eduardo Maranau, there will be a question and answer session. I I would now like to pass over to Karl Fredrik Staubo. Karl, please go ahead.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thank you, operator, and welcome to Golar's Q2 twenty twenty five earnings results presentation. My name is Karl Fredrik Staubow. I'm the CEO of Golar LNG. And today, I'm accompanied by our CFO, Eduardo Maranau. Before we get into the presentation, please note the forward looking statements on Slide two.

[Karl Fredrik Staubo, CEO at Golar LNG]

As normal, we start on Slide three and an overview of Golar today. Golar is a focused FLNG company. We own three units, where two is on the water and one under conversion. The key event of the quarter is securing the twenty year charter for the Hilli as well as signing definitive agreements and consequent final investment decision for the Mark II FLNG. On the back of securing 20 air charters for our existing fleet, we're increasing focus on adding additional FLNG unit as we see strengthening demand for FLNG solutions to monetize stranded associated and reinjected gas opportunities.

[Karl Fredrik Staubo, CEO at Golar LNG]

During the quarter, we increased our cash position through a $575,000,000 convertible bond issuance, and we now have a cash position of just under $900,000,000 With a fully delivered net debt to EBITDA ratio of around 3.4x, dollars 17,000,000,000 of EBITDA backlog before commodity upside and twenty year cash flow visibility, we have capacity to fund incremental FLNG growth units from financing proceeds. Turning to Slide four and a look at our EBITDA backlog and cash flow visibility. On the back of the Q2 contracting events, our existing fleet is now fully contracted for twenty years. The highlights, as mentioned, was fulfillment of all the CPs and FID of the Hilli as well as the definitive agreements for the Mark II in May as well as FID now on August 6. The Mark II FLNG charter remains subject to regulatory approvals and customary conditions precedent.

[Karl Fredrik Staubo, CEO at Golar LNG]

We expect all of these CPs to be met within 2025, and we are progressing according to schedule to meet them. The backlog stands at $17,000,000,000 before inflationary adjustments and commodity exposure through the CESA contracts that can together add significant further upside to the backlog. Turning to Slide five and an overview of the global FLNG fleet. Golar remains the market leader measured by liquefaction capacity. The global fleet consists of seven units on the water and four units under construction.

[Karl Fredrik Staubo, CEO at Golar LNG]

We expect to see increased newbuilding activity from the existing FLNG owners combined, adding up to five units of announced FLNG project plans if they all progress according to schedule. We also see increased interest from gas resource owners increasingly interested in FLNG solutions to monetize gas. This development is a testimony to the attractive costs, proven operational track record and flexibility that FLNGs offer versus traditional land based liquefaction solutions. Golar remains the only proven provider of FLNG as a service. The other companies, as presented on this slide, only monetize gas that they control.

[Karl Fredrik Staubo, CEO at Golar LNG]

A contemplated fourth FLNG unit by Golar will therefore likely be the only available open FLNG capacity with delivery within this decade. We believe we can drive best value in ordering our next unit before locking in an associated charter. This is similar to the successful strategy executed when ordering the Hilli and later the Mark II FLNG. Once we do secure a potential long term contract for our next unit, we plan on continuing our growth ambitions with the fifth unit. We will remain with our strategy to only have one open FLNG at the time, and we expect to be able to fund all visible growth plans with proceeds from debt financing activities of the existing fleet and the overall balance sheet flexibility.

[Karl Fredrik Staubo, CEO at Golar LNG]

We plan on continuing our growth trajectory as long as we can obtain accretive and solid economic returns to our shareholders. Turning to Slide seven and quarterly highlights and developments. The second quarter was a very active and very successful quarter for Golar with several key milestones met. As alluded to a few times already, all the CPs and FID for Hilli's redeployment charter in Argentina was met. Simultaneously, we signed a definitive agreement for the Mark II and later the FID now on August 6.

[Karl Fredrik Staubo, CEO at Golar LNG]

In June, we issued $575,000,000 of convertible bonds and used around $103,000,000 of the proceeds to buy back 2,500,000.0 shares or just under 2.5% of our company. Eduardo will detail some of the benefits of the CB later in the presentation. In July, we issued our annual ESG report containing detailed information about our operations and the benefit to the countries we operate in. It's worth a read for those interested in development that we provide to the countries we operate in. During the quarter, we saw the exit of two of our existing board members, Georgina Sousa and Turlaif Egele.

[Karl Fredrik Staubo, CEO at Golar LNG]

We would like to thank them for their long term contribution to Golar's board. We also welcome three new board members, Benoit Forkadier, Mi Hong Yoon and Steven Schafer. We're excited to have the addition of these three members and look forward to their contribution to Golar's continued success. Consistent with our communicated strategy of adding accretive FLNG growth once the existing fleet has been derisked and committed on long term charters, we have increased our efforts for our fourth unit. We have signed agreements with our target shipyards to confirm EPC price and delivery schedule for the next unit, and we expect to decide on the sign, size and shipyard in the coming months.

[Karl Fredrik Staubo, CEO at Golar LNG]

Turning to Slide eight for an update on Hilli. Again, the key milestone for Hilli during the quarter was the conclusion of our twenty year redeployment charter in Argentina, which adds $5,700,000,000 in EBITDA backlog before commodity upside. Under her existing contract, Hilli continued her perfect economic off time and have now delivered 137 cargoes since contract start up or exported more than 9,500,000 tonnes of LNG from Cameroon. We're in the final phase of entering into a redeployment, upgrade and life extension contract for the shipyard scope in between the units contract in Cameroon and before starting up the twenty year contract in Argentina. We expect this yard contract to be concluded within the third quarter of this year, and the contract is in line with our budgeted redeployment scope.

[Karl Fredrik Staubo, CEO at Golar LNG]

Turning to Slide nine and Gimi. The key milestone for Gimi during the quarter was reaching commercial operations date in June. This is a massive milestone for Golar and our partners BP, Kosmos, PetroSEN and SMH, and concludes a long awaited project start up. The unit is now conducting an appraisal period where we will fine tune the FLNG to maximize liquefaction capacity. We're satisfied with the vessel performance to date, and we're now in the progress of offloading Cargo eight since starting operations.

[Karl Fredrik Staubo, CEO at Golar LNG]

The contemplated $1,200,000,000 Chinese sale leaseback refinancing facility has taken longer than approved by our stakeholders. The facility is fully concluded between Golar and our Chinese counterparts. The delays caused are caused by the stakeholders outside of our control. However, with commercial operations date now concluded, we will work to develop alternative refinancing structures and believe that we can obtain facilities with improved terms versus the 1,200,000,000.0 Chinese sale leaseback facility. The picture on the bottom left is from the first cargo celebration on the GTA Field on May 22.

[Karl Fredrik Staubo, CEO at Golar LNG]

And the event was attended by the presidents of Mauritania and Senegal, as well as the CEOs and senior management of all the stake holding companies. This marks the first phase of the GTA project, and the partners will now turn attention to the next phases of the project with planned production increases that may involve additional FLNG units. Turning to Slide 10 and the Mark II FLNG. The second quarter, as alluded to, was also an eventful quarter for the Mark II FLNG ordered in September. We signed the definitive agreements for the twenty year charter on May 2 to operate alongside Hilli for CESA in Argentina.

[Karl Fredrik Staubo, CEO at Golar LNG]

On August 6, we obtained the final investment decision for the charter. And as explained, we're expecting the remaining CPs to be fulfilled within 2025. The conversion itself is progressing according to schedule, now almost 19% complete. The unit is scheduled to be delivered during Q4 twenty twenty seven. And upon completion, the FLNG will sail to Argentina to start our twenty year operations during 2028.

[Karl Fredrik Staubo, CEO at Golar LNG]

As you can see from the pictures, the donor vessel, the LNG carrier Fuji, has now been cut in half and skidded onto land. The picture to the bottom right is from the fabrication of the sponsons that will be added to the width of the vessel. We have funded approximately $800,000,000 of the $2,200,000,000 conversion budget fully with equity to date. On the back of securing a long term charter, we're progressing financing initiatives for the unit and expect to add asset level debt within 2026. The proceeds from such financing will be used to fully finance the delivery and an equity component into Golar's next FLNG.

[Karl Fredrik Staubo, CEO at Golar LNG]

As part of the yard contract, we also hold an option for a second Mark II FLNG with an estimated construction time of about thirty eight months from ordering. Turning to Slide 11, where we provide an overview of the key commercial terms of our existing FLNG contracts and some of the risk mitigations and embedded upsides in the contract. Golar does not control where attractive gas reserves are located in the world, but we can structure our contracts to mitigate risks and maximize return for our stakeholders. Some of the means to do so is highlighted on this slide. All of our FLNG contracts are on English law, paid in U.

[Karl Fredrik Staubo, CEO at Golar LNG]

S. Dollars and paid offshore. We work with strong charter counterparties that effectively create a buffer between us and the host governments in the geographies where we operate. In the case of Hilli in Cameroon, that buffer is Perenco. For Gimi, offshore Mauritania and Senegal, it's BP.

[Karl Fredrik Staubo, CEO at Golar LNG]

And for our Argentina contracts, it's CESA, which is a consortium comprising Pan American Energy, YPF, Pampa Energia, Harbor Energy and Golar LNG. Some of our contracts have meaningful upside through commodity links. For the case of Hilli in Cameroon, Golar earns $3,100,000 in excess cash earnings for every dollar Brent is above $60 We also make $3,700,000 of annual free cash flow for every incremental dollar per MMBtu of the TTF gas price with no ceiling. In the case of Gimi, we do not have a commodity linked upside, but we have a utilization linked upside if we achieve commercial utilization north of 90% of nameplate. In the case of the CESA contracts for Hilli, Mark two and our ownership in Southern Energy, we make approximately $100,000,000 in excess annual earnings for every dollar offtake is above $8 per MMBtu.

[Karl Fredrik Staubo, CEO at Golar LNG]

The the total downside is around 28. So we have a $28,000,000 downside of less than $7.5 per FOB, and we have $100,000,000 upside. So it's a highly skewed risk reward and one that we think could provide significant excess value to Golar. Turning to Slide 12 and the progress made on our FLNG growth units. We have three key vessel designs, and we differentiate them by Mark one, two and three.

[Karl Fredrik Staubo, CEO at Golar LNG]

The difference is effectively the liquefaction capacity, so you could categorize them as small, medium and large. Mark one can produce up to 2,700,000 tonnes per annum, Mark two, three point five million tonnes and the Mark III, 5,400,000 tons. Both Mark I and II would be vessel conversions, and Mark III would be a newbuild. Given the slightly different approach to construction, we would also select shipyards accordingly. Both Hilli and Gimi is built at Ctrip shipyard in Singapore.

[Karl Fredrik Staubo, CEO at Golar LNG]

And if we are to proceed with a mark one, that's the likely shipyard selection. We are currently working with Citrium to confirm an updated EPC price and delivery schedule. The Mark II FLNG is currently under construction at CMC Raffles. And as already explained, we hold an option to do a second unit at CMC, Raffles. And we we already know the design and the price as we have just ordered this unit.

[Karl Fredrik Staubo, CEO at Golar LNG]

For the Mark three, we see a slightly longer conversion time. We see around thirty eight months for the first two and forty eight for the Mark three, given that you start from scratch and not with the conversion vessel. We've also signed agreements with Samsung Heavy Industries to, develop updated pricing and delivery schedule if we are to order such a vessel, within this year. As explained earlier in the presentation, we expect to get the final price and delivery schedule in the coming months and thereafter make a design decision for where we will continue with our fourth unit. We do see increasing long lead times for critical components, and we therefore plan on securing slot reservations within Q3 twenty twenty five.

[Karl Fredrik Staubo, CEO at Golar LNG]

During the quarter, we have also completed inspections for potential donor vessels should we continue with the Mark I and Mark II FLNG conversion. If we do secure a charter of a contemplated fourth unit, we expect to rapidly thereafter order a fifth unit, which is why we're progressing yard discussions with all three yards at the moment. Turning to Slide 13 and highlighting some of the cost benefits of FLNG versus land based solutions. As you can see from the far left, there is plenty of proven gas reserves in the world that are currently not being produced. If it's not being produced and it's proven, you tend to get them cheap.

[Karl Fredrik Staubo, CEO at Golar LNG]

The second graph is the cost of liquefaction. As we are building a generic standardized design in the Far East, we're able to obtain a far better CapEx per tonne compared to land based solution mainly built in The Middle East and in The US. We still expect new FLNG orders to have a CapEx of around $600 per tonne fully delivered versus approximately double that price for greenfield developments in The US. The last cost component of gas production is the shipping distance to end users from where the gas is produced to where it will be consumed. Subject to which field we are discussing, we see significant shipping advantages, shipping distance advantages versus the key global exporter being The US.

[Karl Fredrik Staubo, CEO at Golar LNG]

Hence, if you have a business with three cost drivers, the cost of gas, the cost of liquefaction and the shipping distance, and you're cheaper on all three, we believe you have a good and sustainable business over time. Turning to Slide 14 and elaborating on these points. When we entered this year, the global LNG production was around four thirty million tonnes, where around 23% or 100,000,000 tonnes is supplied by The U. S. Global LNG supply is set to grow by around 40% between now and 02/1930.

[Karl Fredrik Staubo, CEO at Golar LNG]

However, the absolute majority of that volume is expected to come out of The U. S, increasing its global market share from 23% to 37% of the global market. This is interesting because The US is already the marginal producer of LNG globally. Hence, if you more than double the volume, you increase domestic demand for natural gas on the back of Trump's policies on America first and increased data center build out in The US, we see upward pressure on Henry Hub. Cost inflation of land based liquefaction plants are suggesting increased tolling fees and shipping distances are obviously unchanged.

[Karl Fredrik Staubo, CEO at Golar LNG]

However, if two of the three cost drivers of the incremental producer of LNG globally see upward pressure, we see that as a strong support to international LNG prices. And if you then can obtain cheaper source gas, cheaper liquefaction and shorter shipping distance, we believe we have significant upside potential in our commodity exposure in our Southern Energy contracts. Turning to Page 15 and a slide first introduced by our Chairman on our Q1 call. How big is the FLNG opportunity? Well, the first ever FLNG to be delivered was Golar's Hilli delivered in 2018.

[Karl Fredrik Staubo, CEO at Golar LNG]

The industry was skeptic to introduce complex liquefaction technology in a maritime environment. Since that time, we now have seven vessels on the water, four newbuildings under construction and at least another five vessels planned by the same group of existing owners. We believe this trajectory is similar to what we saw happen in the FPSO industry in the 1980s. The first FPSO globally was delivered in 'eighty five. We believe we're now in sort of the early '90s compared to the FPSO industry.

[Karl Fredrik Staubo, CEO at Golar LNG]

And the FPSO industry now stands at more than two fifty units. Basically, the cost competitiveness, flexibility and time of construction is what is increasingly driving recognition of FLNG technology and build out of what we think is an industry in strong growth. This is why we feel very comfortable with continuing to add units, and we'll continue to do so for as long as we are the only service provider and can secure economics similar to those secured on our existing contracts. I'll now hand the call over to Eduardo to take us through the group results and key developments on the financial highlights during the quarter.

[Eduardo Maranhão, CFO at Golar LNG]

Thank you, Karl, and good morning, everyone.

[Eduardo Maranhão, CFO at Golar LNG]

I'm pleased to provide an overview of Golar's financial performance for the 2025. Moving to Slide 17, let's review some of the key financial highlights of this quarter. We achieved total operating revenues of $75,000,000 with FLNG tariffs reaching $82,000,000 in the quarter, a significant increase from the previous quarter as a result of Gimi's COD, which took place on June 12. Going forward, we will always refer to FLNG tariffs to illustrate the total revenues generated from FLNG's Healy and Gimi, including realized gains from TTF and brand linked fish, as well as all revenues under the Gimi contract. Total EBITDA reached $49,000,000 in Q2, positively impacted by Gimi COD.

[Eduardo Maranhão, CFO at Golar LNG]

Total EBITDA for the last twelve months ended in Q2 stood at $2.00 $8,000,000 This quarter, report a net income of $31,000,000 This figure is inclusive of certain noncash items, such as adjustments in the value of embedded TTF and Brent derivatives within the HEDE contract, as well as changes in interest rate swaps, but also a $30,000,000 gain recognized on day one after the startup of Gimi's contract. We deem the Gimi contract as a sales type lease. And now that we have reached COD, we derecognize the capitalized amounts under assets under development in our balance sheet to a net investment as a sales type lease. Please refer to the appendix of this presentation for a detailed walkthrough of the accounting treatment of Gimi contract. In June, we raised $575,000,000 of convertible bonds and repurchased 2,500,000.0 shares for a total consideration of just under $103,000,000 Following that, our liquidity position has been significantly strengthened with just under $900,000,000 of cash on hand at the quarter end.

[Eduardo Maranhão, CFO at Golar LNG]

I'll talk more about this transaction in the next slides. Further to that, our net debt position at the end of the quarter stood at just under $1,200,000,000 Lastly, we're pleased to declare a dividend of $0.25 per share this quarter, with a record date of August 26 and payment scheduled for around September 4. Now moving to Slide 18. Here, we can see the breakdown of our Q2 EBITDA and the contributions coming from Healy and Gimi, resulting in total FLNG tariffs for the quarter of $82,000,000 Healy revenues are split between base, Brent and TTF linked fees, as you can see on the slide, while Gimi revenues going forward will be recognized between a capital element as well as an operating element, as you can see on the graph below. Total EBITDA from FLNG operations alone was $57,000,000 after certain project development expenses are associated with our growth projects, as Karl explained before.

[Eduardo Maranhão, CFO at Golar LNG]

When we consider our corporate costs and other overhead expenses, our total reported EBITDA in the quarter ended at $49,000,000 Now moving to Slide 19. In June, we raised $575,000,000 of convertible bonds. As part of this transaction, we also bought back 2,500,000.0 shares for just under $103,000,000 at an average share price of $41.09 per share. The notes were priced with a fixed coupon of 2.75 and a 40% premium. One important point to note is the effect of the buyback.

[Eduardo Maranhão, CFO at Golar LNG]

When considering them, the notes are net dilutive to our share count prior to the notes offering only when our share price exceeds $76.7 at maturity in December 2030 before adjusting any dividends paid in the period. This represents a premium of close to 87% above the reference price of $41.9 After the share repurchase, we received total net proceeds of approximately $464,000,000 giving us extra flexibility to fund our growth developments with a fourth or a fifth unit, as explained by Carl. Turning now to Slide 20. Looking back during the past four point five years, we can see our historical record of shareholder returns. I wanted to highlight a few points.

[Eduardo Maranhão, CFO at Golar LNG]

We did a total of $787,000,000 of dividends, share and asset buybacks over this period versus an operating cash flow of after debt service of around $500,000,000 in the same period. During that time, we bought back over 9,300,000.0 shares at an average price of $125 bringing the total share count to 102,300,000.0 shares at the end of Q2. We have also spent over $560,000,000 in dividends, asset and asset buybacks during the same period. Going forward, we plan to use our liquidity release from debt financing proceeds be allocated to fund accretive FLNG growth, while using our free cash flow generation to significantly increase our shareholder returns. So let's take a closer look at that on the Slide 21.

[Eduardo Maranhão, CFO at Golar LNG]

When looking at the time when our three vessels are fully delivered in operation and in operation, we expect our fully contracted EBITDA to grow by more than 4x our current last twelve months figure. This huge increase is even before further commodity upside coming from Healy, Mark two, and our stake in CESA. As you can see on the slide, in 2028, when Mark two comes online, our contracted free cash flow generation could be in excess of $600,000,000 or approximately $6 per share before further commodity upside. Further free cash flow generation under the CESA charters can be estimated at approximately $100,000,000 per year or $1 per share for every dollar per million BTU increase in LNG FOB prices above $8 On a fully delivered basis, our estimated net debt at that point in time would be at 3.4 times to adjusted EBITDA, all fully backed by long term twenty year charters. These will provide us with ample financing capacity to support even more additional FLNG growth units.

[Eduardo Maranhão, CFO at Golar LNG]

Now moving to Slide 22, and as explained by Carl before, following the confirmation of our contracts in Argentina with the FIDs of Healy and Mark two, we can now see the full breakdown of our total firm EBITDA backlog of more than $17,000,000,000 over the next twenty years. One point to highlight is that this number is still before further commodity upside and further inflation adjustments that will happen over time. Moving to the next slide, we can see how changes to LNG prices could positively affect our contract with CESA. We have a limited downside with a very significant upside. For example, assuming FOB LNG prices of $10 per million Btu, our estimated EBITDA could be in excess of $1,000,000,000 per year, as you can see on the graph.

[Eduardo Maranhão, CFO at Golar LNG]

This number could even grow further. So at, for example, $15 per million BTU, this number would grow to 1 and a half billion dollars of annual EBITDA. Just to illustrate the potential scenario and as a reference, if all of our units were in operation in 2022 and assuming average LNG prices during that time, we would be earning close to $3,500,000,000 on that particular year. This really shows the scale and significant upside potential of the embedded kickers in these contracts. That now concludes my update. I'll hand the call back over to Karl.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thank you, Eduardo. Moving to the final section of the prepared remarks and the summary. On Slide 25, we show our key 25 milestones and the focus for the remainder of the year. This year, we have obtained the Gimi commercial operation states, and we're now offloading cargo number eight.

[Karl Fredrik Staubo, CEO at Golar LNG]

We've achieved FID and conclusion of all conditions precedents for a twenty year charter of Southern Energy for the Hilli following her existing contract in Cameron. We've also obtained a twenty year charter and the FID for the Mark two FLNG. As Eduardo has explained in detail, we've issued $575,000,000 of convertible bonds and repurchased 2.3% of our company. And we have sold the remaining noncore assets, including our shareholding in Avenir Shipping and our last LNG carrier, the Golar Arctic. For the remainder of the year, we plan on optimizing our FLNG financing on the back of the twenty year charters, conclude the regulatory conditions precedent on the twenty year contract for the Mark and add further FLNG growth units, as explained in detail.

[Karl Fredrik Staubo, CEO at Golar LNG]

Turning to Slide 26 to summarize some of the key developments following a very strong quarter. This quarter, we've added $13,700,000,000 of EBITDA backlog, now giving our total backlog at around $17,000,000,000 Our adjusted fully delivered adjusted EBITDA is set to grow four times versus the last twelve months EBITDA before commodity upside. This provides a pathway to increase our dividend distributions to shareholder by more than or significantly more than four times as fully delivered adjusted EBITDA is far greater than the debt service increase. Our balance sheet with a fully delivered net debt to EBITDA standing at 3.4x provides capacity to fund additional FLNG growth while maintaining an attractive and increasing free cash flow to equity. Our focus is now on ordering an accretive fourth FLNG unit, and that's what we will turn our attention to.

[Karl Fredrik Staubo, CEO at Golar LNG]

That concludes the prepared remarks, and we will like to turn the call over to the operator for any questions.

[Operator]

Thank you, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Once again, please press 11 on your telephone and wait for your name to be announced. Thank you. We are now going to proceed with our first question.

[Operator]

And the questions come from the line of Chris Robertson from Deutsche Bank.

[Christopher Robertson, VP & Equity Research Analyst at Deutsche Bank]

Carl, just wanted to touch base on the new board members that you mentioned, the three. Just what types of skills or networks and connections that they bring to the table for Golar and if they are driving any commercial discussions.

[Karl Fredrik Staubo, CEO at Golar LNG]

Yeah. Hi, Chris. Sure. So Nihong Yoon is effectively a replacement of Georgina Sousa, and is our Bermuda representative. She comes with a strong accounting background and knows the company well.

[Karl Fredrik Staubo, CEO at Golar LNG]

Then Egli departed and to some extent can be seen as replaced by Steven Schaffer. Steven is the chairman of Talon Energy in The US. He's got extensive financing background and has worked his entire career in large energy infrastructure assets, including natural gas and gas fired power plants. So we expect him to to add significant capacities both on financing and and other industry connections. Lastly, we have the introduction of Benoit.

[Karl Fredrik Staubo, CEO at Golar LNG]

Benoit is the former CEO of Perenco, and Perenco is the single largest shareholder of Golar, owning just shy of 10% and are also the charterer of the hilly today in Cameroon. And Perenco is also one of the world's largest independent producers of oil and gas, and they have several fields around the world that could see FLNG deployment. So we expect Benoit's background to be highly relevant for us, in particular when it comes to identification of attractive gas fields and upstream know how.

[Christopher Robertson, VP & Equity Research Analyst at Deutsche Bank]

Thanks, Carl. My second question, I think you mentioned earlier as it relates to the Gimi that there's contemplation around maybe a second asset there. As it relates to discussions, let's say a mark three was contemplated that was large enough to encompass any kind of growth or expansion of of GTA. Could you then swap out the Gimi and have that be open for employment elsewhere, or would that be in addition to?

[Karl Fredrik Staubo, CEO at Golar LNG]

I think right now, all options are are being evaluated. If a mark three would be introduced to the project, it could either swap out the Gimi or be in addition to. That depends on on the rest of the infrastructure. The way we understand it is that it's a relatively low cost to double the throughput capacity of the FPSO. Hence, it should be highly accretive to double the capacity from today's two and a half to five MTPA.

[Karl Fredrik Staubo, CEO at Golar LNG]

Arguably, one of the simpler ways of doing that is to order a mark three and that we take we we swap it out with Gimi subject to to final commercial arrangements. That's a deal that we would welcome because we see very strong demand for that type of of size elsewhere. So that's absolutely not something we would rule out, but it could also be in addition to. But then there's other constraints on the upstream that needs to be unlocked.

[Christopher Robertson, VP & Equity Research Analyst at Deutsche Bank]

All right. Thank you. I'll turn it over.

[Operator]

We are now going to proceed with our next question. And the next questions come from the line of Frode Morkedon from Clarkson Securities.

[Karl Fredrik Staubo, CEO at Golar LNG]

Hi, Frode.

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

Yeah. I just wanted to kick your brain on valuation. Of course, you have a huge backlog, and I feel like as as an analyst, a lot of discussion I have with investors, you know, just end up in talking about the valuation of that backlog. Right? So particularly what's the appropriate discount rate, which, of course, is all down to assessing the risk.

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

Right? But I just wanted to hear what kind of framework you think is useful when you evaluate that backlog.

[Karl Fredrik Staubo, CEO at Golar LNG]

Sure. So in terms of understanding the valuation, which I guess is the question on the backlog here, we obviously have a fixed set of EBITDA, which comprise And if you combine them all in net of g and a, it's around $800,000,000 per year before CPI adjustment and commodity upside. The right discount factor on on those, we will leave it to to you to decide. But what we historically have seen that some of our peers, including Cheniere and Venture Global and and and that type of companies trade at, we see that probably north of of 10 times, but the market can decide what the right multiple factor is.

[Karl Fredrik Staubo, CEO at Golar LNG]

Where we think the biggest, sort of misunderstanding or arguably mispricing is is understanding the upside of our commodity exposure. We believe the uniqueness of that exposure is that we have fixed the breakeven of which we get a profit share from at around $8 per MMBtu for twenty years. If you look at the developments, of where Henry Hub is likely to develop on the back of significant increase for Henry Hub gas, both domestically and for exports, as explained earlier on, we see upward pressure on Henry Hub. And in line with what Cheniere Venture Global and other US liquefaction providers have explained on each call they have is that the tolling fees for US exports is on its way up. And according to Venture Global, it needs to go north of $4 to justify any exports.

[Karl Fredrik Staubo, CEO at Golar LNG]

If those two are are true, the $8 fixed profit share mechanism we have, we think is unique in the market. You can't obtain it anywhere else, and we think it's it's worth a lot to have that twenty years out. In addition, we also don't think that the market price our platform as the only proven service provider of FLNG in the world and certainly not growth. And I don't think we want to enter into a conversation today of exactly what we think it's worth, but we do think as much as if we bought 2.3% of the company at forty one zero nine as late as June. So I think that speaks to where we think it is.

[Karl Fredrik Staubo, CEO at Golar LNG]

And I think over the last four and a half years, we bought back 9,300,000.0 shares, and we have bought back assets where we've been able to buy them back more accretively than buying our own share, which is effectively buying back Healy from NFE and Healy from minority interest from Black and Veatch and and Sequium. So I think, overall, we are putting money where our mouth is, and and we continue to do so as late as June.

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

Yep. That's great. Good call. I guess what you're saying that, of course, this you think this stock has higher intrinsic value than the current market price. Right?

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

So I guess and you've been buying back stock, as you said. But just, like, generally speaking, how important is it for you to close that gap, so to speak? Would you just prefer to let the cash flow speak for themselves and, you know, market prices adjust over time, or are you actually consider actively boosting that value further? Right?

[Karl Fredrik Staubo, CEO at Golar LNG]

So speaking as management, what we can do is to run the company to the best of our ability. That's what we try to do every single day getting into this office. It is also our job to see that that value is reflected in the stock market or or in the value of the business. As our chairman, who joined our quarterly call for the first time in a very long time, last quarter alluded to is that if the market fails to recognize that value, the board will seek other alternatives, to crystallize the value. I'll I'll let him stand for that statement, but I saw him, reconfirming those intentions in newspapers as late as July year.

[Karl Fredrik Staubo, CEO at Golar LNG]

So I think as management, our work is to do the run the business to the best of our ability. And if there are price discrepancies between private versus public money, we will look to identify it. But for us, the key effort on a daily basis is to run the bay business on the best of our ability, and we think there is a lot of attractive growth that can be executed. I think we showed that as late as ordering our third unit in September and fixing it in May, and we intend to do a similar type of structure for Unit Number 4.

[Frode Morkedal, Equity Research at Clarksons Platou Securities]

Perfect. That's very clear. Thank you.

[Operator]

Thank you. We are now going to proceed with our next question. And the next questions come from the line of Alexander Bidwell from Weber Research and Advisory. Please ask your question.

[Alexander Bidwell, Associate Analyst at Webber Research & Advisory]

Good afternoon. Thank you for the time. Could you provide a little bit more color on some of the commercial prospects for a fourth unit? What sort of demand are you seeing around contract start up? And are you seeing any gravitation towards a particular FLNG spec?

[Karl Fredrik Staubo, CEO at Golar LNG]

Yeah. So it's it's down to when it comes to start up, I think the construction time that we have three years or more or less three years from mark one and two is sufficient to provide the required upstream infrastructure. So we do not see the the upstream infrastructure being the the gating item. Most of the opportunities we are discussing in in West Africa is likely mark one or two. And then some of the projects we are discussing in South America and in The Middle East could be a mark three.

[Karl Fredrik Staubo, CEO at Golar LNG]

So that's sort of broadly where we see it. Naturally, just given size and throughput, there are more commercial opportunities for smaller sizes. But as long as you have a few people in the running on the larger size, you can still drive competitive attention, and and that's what we're focused on. In terms of number, the smaller is is where there's more, and larger, you still need to create have enough for competitive attention.

[Alexander Bidwell, Associate Analyst at Webber Research & Advisory]

Alright. Thank you. Appreciate appreciate the color. And then turning over, to long lead items, you'd mentioned that, some of the, the time lines have been increasing. Just curious, is there any, cross compatibility, between long lead items for the mark one, two, and three?

[Alexander Bidwell, Associate Analyst at Webber Research & Advisory]

Could you say order certain, long lead items and then, I guess, change which direction you go in terms of asset?

[Karl Fredrik Staubo, CEO at Golar LNG]

That's a very good question, and the answer is yes. It is compatible. So, basically, we use black and beach topside technology for all the three designs. It's just a matter of how much of the equipment you put on. The key long lead items that has been dragged out in time is is gas turbines on the back of very strong demand from the aviation industry data centers.

[Karl Fredrik Staubo, CEO at Golar LNG]

So those are the ones we're likely to put the slot reservation on first, and that's interchangeable between the designs. It's just the number of turbines you need is different. So the whole idea is to do the slot reservation and decide on the number of turbines later.

[Alexander Bidwell, Associate Analyst at Webber Research & Advisory]

All right. That makes sense. Thank you very much. I'll turn it back over.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thank you.

[Operator]

We are now going to proceed with our next question. And the questions come from the line of Sheri Falmagabi from BTIG. First,

[Sherif Elmaghrabi, VP - Equity Research at BTIG]

I just want to follow-up on Chris' questions beginning. Last week, one of the GTA partners mentioned the possibility of debottlenecking Jimmy to increase production. Can you shed some light on what that would entail?

[Karl Fredrik Staubo, CEO at Golar LNG]

Yeah. So as explained in the prepared remarks, we're currently in the appraisal period. We're fine tuning the operations of the FLNG. And if you want to get very technical, it has to do with air inlet chilling. It has to do with the turbo expander, that we can tweak, and and some other of the equipment that we are currently fine tuning to boost production.

[Karl Fredrik Staubo, CEO at Golar LNG]

That's really the the key technical items. There are also certain, improvements that can be extracted from the interaction between the FPSO and and the FLNG. So throughput of a liquefaction plant is highly linked to ambient temperature and gas quality. So if you can through air in the chillers, impact the ambient temperatures and through interaction between the FPSO and the FLNG tweak the gas composition, you can boost throughput.

[Sherif Elmaghrabi, VP - Equity Research at BTIG]

That's good color. And and then for the the range between a mark one and a mark three, I appreciate you giving us kind of a dollar rough dollar per ton given pricing's still a bit of an unknown. But are there economies of scale associated with going for a large, like, a mark three versus a mark one?

[Karl Fredrik Staubo, CEO at Golar LNG]

In terms of CapEx per ton?

[Sherif Elmaghrabi, VP - Equity Research at BTIG]

Right. Yeah. In terms of CapEx per ton.

[Karl Fredrik Staubo, CEO at Golar LNG]

CapEx per ton, I I would actually say less so because you save a lot of time and money starting with the conversion unit versus building from scratch. However, in terms of operating costs, there is significant economies of scale because you don't need twice as many people to run a Mark three as a Mark one. You probably need the same. So on a unit economic point of view, it's more efficient both in terms of OpEx and demurrage in offloading.

[Sherif Elmaghrabi, VP - Equity Research at BTIG]

Got it. Thanks, Carl.

[Operator]

We are now going to proceed with our next question. And the questions come from the line of Liam Burke from B. Riley Securities. Please ask your question.

[Liam Burke, Managing Director at B. Riley Financial]

Thank you. Hi, Carl. How are you?

[Karl Fredrik Staubo, CEO at Golar LNG]

Well, thanks. How are you? Carl, I mean, you walked you stepped up

[Liam Burke, Managing Director at B. Riley Financial]

the Mark one to the Mark four three rather, and you essentially doubled your capacity. Do you anticipate further capacity growth on next generation FLNGs? Or is this just a function of the offshore reserves?

[Karl Fredrik Staubo, CEO at Golar LNG]

We do not no. You're right. We don't see a very we we don't expect to go for, like, a 10 NTPA unit, if that's the question, because then you start to get into far too few fields. One thing is that you you need larger reserves. The other thing you need is be able to service the throughput.

[Karl Fredrik Staubo, CEO at Golar LNG]

So I'm not an upstream expert, but some wells, even if you have a massive reserve, if you empty it too quickly, you can have pressure losses, and you can destroy the recoverability of the entire reserve. So it becomes very sensitive if you start to go beyond this size.

[Liam Burke, Managing Director at B. Riley Financial]

Okay. At the higher capacity levels, I mean, the FLNGs generally or the original ones generated mid to high teens returns on invested capital. When you get to twice the capacity, how do you see those returns increasing?

[Karl Fredrik Staubo, CEO at Golar LNG]

If you look at what we did in Argentina with the Mark II, we're able to do twenty year contracts at around that one is five and a half times CapEx to EBITDA before inflation adjustment and before commodity upside where OpEx and and asset level tax is passed through to the offtaker. So I think if we are able to do twenty year business at around five times with commodity exposure and CPI adjustments, I think we we think that's good business for twenty year contracts, and and that's similar to what we would target on any new project.

[Liam Burke, Managing Director at B. Riley Financial]

Got it. Thank you, Carl.

[Karl Fredrik Staubo, CEO at Golar LNG]

Thank you.

[Operator]

We are now going to take our next question. And the questions come from the line of Craig Shea from Trujee Brothers Investment Research. So

[Craig Shere, Director - Research at Tuohy Brothers Investment Research Inc]

it seems your focus is on projects with commodity kickers. So in in that respect, ultimately, is is give me something that you might contemplate divesting? And to a degree BP needs to double the size of that project, would they be amenable to the next phase having similar commodity kickers is what you're looking at in Argentina and elsewhere?

[Karl Fredrik Staubo, CEO at Golar LNG]

To the first part of the question, we've explained this on some previous calls, but the Gimi contract is or was very important to prove the concept. Hilli was the first FLNG to ever be delivered. It's well known in the maritime industry that BP has the highest operational standards in the industry. And if a Golar FLNG can qualify as sufficiently safe and reliable to operate for BP, then it's a proof of concept. So for us, the BP contract is attractive in itself, but it's mainly a proof of concept, And it has opened the doors for significant further FLNG deployments.

[Karl Fredrik Staubo, CEO at Golar LNG]

To sort of put some more color into that, Pan American Energy, which is the largest counterpart in CESA, is owned 50% by BP. So the fact that they have seen what both our assets and the company can deliver in Mauritania, Senegal has given them confidence to continue to expand the working relationship. We have no current plans of divesting that asset. We think the way the structure of the contract is, you can obviously leverage it differently and still get very attractive equity returns. As for growth on the GTA, that's subject to commercial negotiation, but we do expect any incremental liquefaction capacity to come at a higher tariff than that of Gimi.

[Craig Shere, Director - Research at Tuohy Brothers Investment Research Inc]

And not only a higher tariff, but but a commodity link, like everything else you're focused on?

[Karl Fredrik Staubo, CEO at Golar LNG]

Yeah. So when we do contracts, it's always a trade off between the fixed component versus commodity. So if people don't want commodity, you need to pay up on the fixed. It's a trade off.

[Craig Shere, Director - Research at Tuohy Brothers Investment Research Inc]

Gotcha. Okay. And and and last question. I just want to get clear on the order of things that you've laid out. So you're spending balance sheet cash on long lead items, ahead of the next FID

[Craig Shere, Director - Research at Tuohy Brothers Investment Research Inc]

Mostly, you mentioned about, the the turbines. But you you won't FID, a fourth, FLNG shipyard commitment until you have a contract in hand. But after you have that, you'll go on balance sheet for a fifth FLNG project. Do I have that right?

[Karl Fredrik Staubo, CEO at Golar LNG]

Yes. So we do long leads now. Then when we get sufficiently comfortable, we order unit number four. Once unit number four is locked in a twenty or or a long term contract, we then go and order unit number five. But we will constantly ensure that we have ample financial flexibility to do it.

[Karl Fredrik Staubo, CEO at Golar LNG]

We will never ever put this company in a growth position that challenges the balance sheet.

[Craig Shere, Director - Research at Tuohy Brothers Investment Research Inc]

Okay. Got you. Thank you.

[Operator]

We have no further questions at this time. I will now hand back to you, Mr. Carl Friedrich Stabo, for closing remarks.

[Karl Fredrik Staubo, CEO at Golar LNG]

That concludes Golar's Q2 earnings call. Thank you all for dialing in, and have a good day.

[Operator]

Concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a great day.

Participants

Executives

• Karl Fredrik Staubo, CEO
• Eduardo Maranhão, CFO

Analysts

• Christopher Robertson, VP & Equity Research Analyst at Deutsche Bank
• Frode Morkedal, Equity Research at Clarksons Platou Securities
• Alexander Bidwell, Associate Analyst at Webber Research & Advisory
• Sherif Elmaghrabi, VP - Equity Research at BTIG
• Liam Burke, Managing Director at B. Riley Financial
• Craig Shere, Director - Research at Tuohy Brothers Investment Research Inc